Erosion of market confidence

[phoenix_top_drawer]

Hello all,

For years I've studied ripple effects of corporate decisions. Some of it is rather predictable.
E-Bay recently decided on dramtic price increases. There was and is much angst abroad in the land. That angst might be translating to buyers backing off because they are not sure if the sellers are going to be around once 2-18 happens. I'm hearing more and more sellers having an attack of the "screwit I'm outta here's". Chances are some purchasers are worried that they'll push send on their PayPal button and not get their stuff.
I think that somehow we've got to send a clear message that on 2-19 we'll still be interested in doing business in this venue.
I don't know how or who but I think it's something we've got to look at seriously.

Brad

[shoplineca]

Brad
The eBay marketplace has changed as a result of fee increases, as a result of larger companies selling on eBay as a result of less marketing of eBay by eBay to non-users.

I commented in a thread a couple of months ago, that I have not been an active buyer on eBay recently, especially compared to what I used to do in purchases.

My reasons are directly related to the change in how people are marketing items where the excitement of possibly getting a great deal is not as obvious as it once was. Instead I wade through pages and pages of mass merchanisers peddling their wares while I am trying to find those few individuals selling a used item for a good price.

Its not worth it any longer and where I once made at least 2 purchase per month, I havent made a purchase in a year. The same goes for other people I have talked to who no longer shop on eBay where they were once fairly active.

The other thing that has been happening, is an increase in shipping rates and excessive delays at the borders by customs. Canadians are now making fewer purchases frm US Sellers and US Sellers are making fewer purchases from Canadian Sellers in some product lines.

I dont believe that it is the Sellers that should be sending out a message, nor are the treats of Selers closing their eBay stores in mass by Feb 18th greatly affecting stock prices.

eBay has cut back very seriosuly in marketing itself to the point that just about the only press they are getting is negative press.

Instead of radio, television and print ads, they are hoarding their profits and doing little to attrack new users and bring back members who have not been actively buying in recents months.

No, I believe that eBay has to go out to the consumer community BIG TIME and flog itself as THE PLACE to shop online and bring us some business as that is what we are paying them to do.

Malcolm

[ospreylinks]

I am with Malcolm.... Ebay is the owner of the mall and as such has an obligation to attract the tire-kickers that make it all work...

10 years ago, Ebay was new, novel and reinventing itself rapidly as new vendors got on board.

Today, it is difficult to differentiate between the crap and the goods, huge press on the fraudsters, etc etc etc.

Ebay has to bring new potential buyers to look around, but are doing nothing in this regard (when was the last time you saw an Ebay print or TV ad?), instead their resources are being spent on developing an overly complicated interface, confusing and conveluted policies and raising fees......

Snd if you review their fee increases are mainly in listing features, which mean they get their money regardless if the item sells or not... You don't think they have done an analysis and realze sell-through is dropping and to maintain their revenue streams they have to increase fixed fees?

How long does Ebay have to confront, admit and fix these problems....???? I don't know, all I know is I am really grateful that I do not rely on Ebay to earn a living.

Jeff

[dragons_horde]

I have heard several on this board indicate that e-bay has reduced marketing and is spending less attention to the market place.

Is there any verifiable proof about these statements? Malcolm you have indicated several factors in your post what is your source for this information?

I would be very interested to see the facts about these issues for example:

1) How much is e-bay spending in North America to market itself? How much did it spend last year. Two of the above posters indicate it is less. In what source did you find this information?

2) Are there fewer buyers now on e-bay? Again I hear anecdotal comments all the time on these boards about how things are slower but is it a fact there are less transactions on e-bay.com and e-bay.ca this year then last?

3) Less US buyers buying from ebay.ca sellers. This certainly isn't the case with my business but many have indicated that it is the case with theirs. Any proof beyond half a dozen sellers?

For the record I am not happy with any increase to my operating costs but the litany of sellers making unsubstantiated claims against e-bay and its policies without any evidence is hardly helpful. (Beyond stirring up people's emotions.)

While everyone is free to make whatever comments they like. The amount of credence others will give their words is based on whether they present facts and not just opinions.

[sunward-hobbies]

1) -

2) yes, few buyers. The sell through rate ( % of completed auctions ) is down. Now 40%

3) I haven't seen a large drop in US buyer in general. Just less buyers.

Angelo

[shoplineca]

Are you happy with the eBay television ads that you see on TV? Do you like the newspaper ads they have been running? How about those great radio spots on your local radio stations? Or how about the full page magazine ads enticing people to come to eBay to purchase?

Maybe its just Ottawa and North Bay that doesnt get any of the above because it has been at least 6 months since I last saw a TV ad (or any ad for that matter) and I was in Florida at the time. I recall seeing a couple of ads over Christmas 2003, but my sales where great all through January and February of last year too.

If they dont advertise, how do they get people to come online to eBay to buy from us?

Malcolm

[dragons_horde]

I have never seen an e-bay ad in my local newspaper or radio. Of course I could care less whether e-bay was advertising here in the Maritimes (or Toronto for that matter) 90% of my business is American so the question we should be asking is are they spending more or less on advertising. Has site activity gone up or down in the last few years. Where has the growth in user activity been found (North America, Asia, Europe, etc?) etc.

I have seen TV ads on US networks (CNN runs an e-bay ad nearly every day) and large US magazines. (my wife has seen them in Martha Stewart Living)

Look it is very easy to gripe and moan about how poorly e-bay does its job but unless there is verifiable proof that the job being done is significantly worse then the job they did 5 years ago it is simply words.

So to answer you question Malcolm. "If they don't advertise how do they get poeople omline to EBay to buy from us?" You have not shown they do NOT advertise. You have not shown there are less people on the site then last year. You have not shown there are less transactions this year then previous year.

Hey if there is information out there that this IS the case I would love to see it.

[shoplineca]

First off 90% of my business is in Canada so I do care that they dont advertise here. Originally 75% was in the US however Canadians took up the slack when the US started a boycott of many Cdn Sellers after the Iraq war started. (No I cant give you the statistics on the boycott but I can send you some of the hate emails I got as a Cdn Seller, not to metion some of the postings I kept from the US PS Discussion Board.)

Martha Stewart Living has a massively declining readership so I suppose if eBay is advertising there, it is appropriate, although I understand it is now one of the most read magazines in US prisons.

I watch CNN daily yet haven't seen any eBay ads on CNN on a daily let alone weekly or monthly basis.

So in answer to your answer about advertising, you have not shown where they advertise except for dropping the names of CNN and Martha Stewart, one of which I never see any eBay ads on and the other, few people read any more.

Look, I am not trying to be confrontational, you challenged my postings.

I have my opinion based on a very long history of doing business internationally in many industry sectors and I feel that eBay is doing less marketing to encourage buyers to make purchases on eBay while increasing their fees to sellers in ways that reflect that they wish to earn their income from the front end rather than the back end.

That means that they dont believe sales are going to keep up with their need for earnings so rather than increasing their percentage of FVF if and when goods are sold, they are taking them on listings whether the items sell or not.

That is reflective of their lack of confidence in earnings through increased sales which means less buyer transactions or smaller dollar sales.

Further they put through a fee increase and have not said how they are going to generate any more traffic to eBay to purchase. They have not indicated that they are re-investing their money into eBay to generate business which translates into sales so that we can recover the additional costs due to their fee increases.

The reason is that they are not going to be increasing marketing beyond opening up new overseas eBays, which is of no help to my business.

If you are pleased with their direction and it helps your business then that is great however this thread is addressing the concerns of those of us who are affected by their lack of marketing, perceived or otherwise.

Malcolm

[dragons_horde]

Hey I don't want to get confrontational either but beyond expressions of personal anecdotal evidence and personal expertise you are basically saying "I don't see them advertise so they must not be advertising." and "My business model on ebay is not performing as well as it used to so therefor all business models on ebay must not be performing as well."

I just did some quick checking.

E-bay spent about 200 million on marketting in the year 2000 and spent 567 million for the year of 2003. Now I don't have 2004 stats yet but unless they did a 180 it is likely to be around the 600 + million range which sits at an above average 25 % marketing ratio to overall sales. That seems pretty agressive to me.

I think we could spend countless hours trying to get inside the heads of ebay execs. We can each profess we understand each decision by ebay. Each of us are entitled to our opinions but lets not spend alot of time making statements that just aren't true.

You don't like ebays fee hikes? Fine You think the increases are wrong headed? That's cool too. Just please don't make statments like "They are increasing fees and aren't spending anything on marketting." that is not true. THey are spending more then ever. Don't say there are less buyer because every site I have checked has indicated that as of 2003 there were more buyers then the previous years by a very large percentage.

Opinions are great. Statments that are not contrary to established facts just are not helpful.

Which is what I think this thread was all about. Ebay increased their fees. All the facts I have seen is there have been no decreases in buyers and most buyers could care less about the increases. Long term maybe ebay made a mistake but I will wait to see...

...wait to see if the facts support that statement.

[shoplineca]

Once again I never said LESS Buyers. Buyers are simply members who are registered with eBay. Whether they purchase or not is another matter and that is what I addressed. I could care less if there are 300 million members, I care more that they are actively buying.

Again, spending advertising dollars opening new eBay markets around the world may help eBay grow, but that doesnt help the majority of domestic Sellers(US and Canada) and in fact may eventually have a detrimental effect when people in those markets start selling products that many of us are now importing.

Your statistics on eBay's spendings in 2003 was reflected in 2003 being a great selling year. In 2003 eBay advertised on television and on other media. That was a point I was making! They spent money, it was seen by people and it was reflected in sales.

There was less visible advertising in late 2004, and whether the same or more money was spent, it was evidently not spent on the same type of media advertising as in previous years. In fact, eBay stated that in 2005, the Feb fee increases are going to help eBay open new eBay markets worldwide so while advertising dollars could match even what they will post for 2004, it is not all being spent in the domestic North American market.

I along with others that have subsequently posted here, dont believe that the Buyers are knowingly affected by the fee increase. We never said that at all and in fact disagreed with the OPs suggestion.

While the Buyers will be affected at some point through fee increases being passed along to them by some Sellers, Buyers are not about to boycott or fear trading on eBay any more or less than before eBay announced their Feb fee increase. Not certain why you were trying to argue that point with me since it is one that was already shared.

I dont recall telling anyone on any post how to run their business, or how they should conduct themselves on eBay or on this forum. However that didnt seem to stop you from telling me what to do.

I honestly dont know where you get off telling me what I should or shouldnt post here. In one paragraph alone you told me twice what I cannot do or say in posting on this forum (and in both cases you were substantially wrong in what you assumed I had said).

You want to debate something, thats fine but I will post what I want so long as I am within the boundaries of eBay's rules on posting in this forum!

Malcolm

[phoenix_top_drawer]

My sense, as a long time public relations guy, is that they don't necessarily have to spend more money. But I firmly believe they do have an opportunity to manage their message in the media better. That's relatively low cost and high yield done right.

Brad

[shoplineca]

Right Brad!
Similar to our hospitals in Ontario. Its not spending more money that is what is required, its spending the money correctly and effectively.

With eBay it is getting out the right message.

I think that this is especially true and important right now given the amount of negative publicity over recent months.

I think that is probably what you were hitting on in your original thought as well, correct?

Malcolm

[ospreylinks]

I am confused, according to Dragon_Horde, things are good, mind you his profile indicates he has been registered since Jan 2003.

Well Mr. Horde, what we are saying (those of us with a better than two year sales history) is that it is going downhill.

Gee, imagine how well you could have done had you been here during the heyday.....

What those on this board are saying is that transactions are down... plain and simple.

Jeff

[ospreylinks]

Oops, I guess I don't have the right to say that without undertaking a larger sampling....

So, all on this board who are experiencing a weakening in sell through, say your piece here (or if this is not the case, let yourself be counted as well)....

Jeff

[shoplineca]

Jeff
We arent entitled to our opinions here, whether we have 2, 3 or 5 years on eBay or 30 years in business in the real world, our experience in these matters means nothing without using eBay's statistics.

I mean what do you know about business Jeff? All you do is sell golf balls, clubs, bags and gloves on eBay right? The rest of the time you are fishing and hunting up there in North Bay.

I watched CNN from 5:30pm to7:30pm tonight but no eBay ads. I watched it a couple of other times earlier in the day, such as this morning between 7am and 8:30am.

Of course it is possible that the ads are not being broadcast in Canada. Just like the recent gifts given to US and UK Power Sellers and not the Canadian Power Sellers, they wont ship their ads across the border.

Your analogy of the shopping mall is a good one. I can think of that Mall in North Bay where the Walmart is and how lack of marketing the mall for so many years created such a lul in business. Same thing in Pembroke/Petawawa. One Mall does an excellent job promoting itself and the stores and it all merchants are doing great while the mall at the opposite end does no promotions at all and is 80% empty.

The Mall's job is to promote and encourage people into the mall through creative advertising (spending advertising dollars wisely, not necessarily more, as Brad would suggest).

I actually came up with a marketing idea for eBay and I am thinking about pitching it to them however it will take a bit of an investment on my part first and I want to have enough confidence in them before I invest any more money into eBay.

But what do I know? I only sell musical instruments on eBay.

Malcolm

[shoplineca]

It appears that a fair piece of the 2003 advertising budget may have been spent on purchasing online marketing and shopping companies around the world, such as their purchase of the Chinese shopping site "EachNet" for $150 million USD. In that same year they purchased "FairMarket", a marketing platform company.

One of the biggest marketing expenses may have been through a partnership with Conducive's "AdMarketplace" where eBay refers to their program where Sellers bid on keywords to trigger banners to market the sellers items or userid (Keyword Advertising).

It appears, that much of their marketing funding in 2003/2004 was spent on internal marketing tools and buying into new countries, such as China.

Again I ask, how does any of that draw Buyers to eBay?

Malcolm

[shoplineca]

While I normally post Quotes on another thread, I thought that this quote would be appropriate as it deals with "statistics" supoosedly resembling or supporting the truth:

"There are three kinds of lies: lies, damned lies, and statistics."

Malcolm

[recped]

Of course statistics can be twisted to show almost anything you want.

There are two numbers that are fairly reliable, the number of listings and the number and value of transactions, both are UP year on year although the pace is as can be expected slowing if not in base numbers at leats in percentage terms.

I don't think eBay needs to spend any more money on marketing (it only increases their overhead, leading to fee increases). Thanks for giant corn flakes and "rare" grilled cheese sandwiches there are few people on the planet that don't already know what eBay is.

My sales are down a bit from last year, about the same as the year before and way down from 2002 when I was maintaining about 50% more listings than I am now.

If you have the widgets the people want at the right price and have enough listings the sales will be there. A much greater negative impact on my business has been the exchange rates which obviously are not the fault of eBay.

The OP referred to "dramatic" price increases, I don't have a store and don't use gallery, the only change is a slight one for BIN, not what I would call dramatic.

The big change is with stores and they have been underpriced compared to the auction format all along. It was inevitable that they would try to even this out at some point.

My mother (89) has NEVER used a computer, doesn't watch TV, only listens to CBC radio and doesn't read any magazines where eBay have advertised but even she knows about eBay (although she doesn't quite understand what it is).

List more = Sell more and if it doesn't then switch product lines or move on to another career.

Ben

[shoplineca]

People know what McDonalds is but they need to advertise to draw people there to eat or the people will go to Burger King or Wendys.

Same goes with items within a store. Its not good enough that people know the brand Corn Flakes if they walk into their grocery store and another brand has the key 'floor space' to attract the buyers, the other brand will outsell Corn Flakes.

Dont tell a car dealership they dont need to advertise. Just watch everyone go to the competitor selling the same brandexcept they runs TV, radio and newspaper ads.

Sorry Ben, marketing your store or your product requires advertising, just knowing you exist is never a substitute for good advertising.

... and of course the quality of the advertising does more than the quantity or dollars spent on it however any of the 3 is better than nothing.

My mother is 85, never used a computer etc etc etc and knows who eBay is too but she is not a target market for the majority of sellers.

There are millions and millions of eBay members, and millions of those member accounts that are not active or the members seldom purchase.

What is being done to get those people making their purchases on eBay instead of the local B&M store or instead of another .com online site (whether it is an auction site or store site)?

I commented how I had cut back from shopping on eBay, well my son has as well yet he purchases online just as frequently as he used to except he is on other sites.

Your anaolgy of having a widget everyone wants is fine just as long as they buyer with the most bucks is the one on eBay at the time you list it.

Malcolm

[shoplineca]

Here is an excert from a Feb 2005 Reuters financial report on eBay re: marketing/advertising:
"Much of eBay's early growth came via word of mouth, but now the company is having to pay to grow. It has increased advertising in Germany and the United States, where some sellers are grousing about rising fees and raising fears that sellers could abandon eBay altogether or seek alternatives to the site, which has a virtual lock in the U.S. market. Meanwhile, the company is plowing investment into Europe and Asia, where competitors are more likely to await."

It further reports that they will be making about $300 million in capital investments in 2005 of which $200 million is slated for PayPal and $100 million into eBay's plunge into the Chinese market.

Another Reuters report had this to say following Cobb's olive branch offering to Sellers on Sunday: "Management is finally beginning to admit and acknowledge the pain and frustration of its most important customers," at the same time, it went on to say that the offering was generally rejected by the majority of Sellers.

Malcolm